Rupinder Pal Singh (8th minute), Surender Kumar (15th minute), Mandeep Singh (44th minute) and Akashdeep Singh (60th minute) scored for India while the team's defence ensured a clean sheet denying the visitors any scoring opportunities.
India will now fight with England in the bronze medal match on Saturday.
Defender Harmanpreet Singh converted two penalty corners as India stamped their authority over New Zealand with an assertive 3-0 victory in the Azlan Shah Cup.
The loss means India will now play Malaysia for the third-fourth place classification match on Sunday.
India suffered their second loss in three games as they lost to New Zealand in the Six-Nation hockey tournament
After a goalless opening two quarters, Nick Ross broke the deadlock for New Zealand in the 41st minute. But the hosts' joy was shortlived as India equalised two minutes later through a field goal from SV Sunil (43rd).
Ramandeep Singh, Nikkin Thimmaiah and Lalit Updhyay scored a goal each as India defeated New Zealand in the second hockey match to level series.
India had beaten New Zealand A 3-1 and 2-1 in the two practice games in Auckland but that did not help the Asian team as the Sardar Singh-led side tamely went down to the hosts.
The last time India and New Zealand played each other was in the Hockey World league Final 2014 and it was the Black Sticks who came out triumphant.
India will take on New Zealand in a six-match Test series as part of their preparations for the 2016 Rio Olympics.
A late goal from New Zealand destroyed India's hopes of drawing the game in the Azlan Shah hockey tournament.
After a draw against Korea, India lost to New Zealand in their second match of Sultan Azlan Shah Cup hockey tournament. Catch all the highlights of the match here.
In a hard fought match, India took an early lead through Parvinder's field goal just five minutes into the match and they kept the lead in the first half.